U.S. wheat maintained its rally as Tuesday's trading session concluded, driven primarily by short-covering, CBOT floor traders said. Weakness in the U.S. dollar and a large pool of wheat tenders were also supportive, traders added.

The Chicago Board of Trade March wheat gained 24 cents at US$5.44 per bushel, just under the day's US$5.48 high. The contract failed to test solid technical resistance at US$5.50, but it traded above the five-, 10- and 20-day moving averages. Kansas City Board of Trade March wheat added 22 cents at US$5.65, and Minneapolis Grain Exchange March wheat rose 18 1/4 cents at US$6.07 1/4.

Traders said speculative funds are short about 29,000 CBOT wheat contracts, indicating a closing of about 8,000 short positions since Dec. 9 in the most recent Commodities Futures Trading Commission commitment of traders report.

"Wheat futures are supported by higher CBOT grains and a softer dollar," says Alan Brugler, president of Brugler Marketing and Management, in his daily midday commentary. "Decline in the U.S. dollar has sparked some foreign interest as Taiwan purchased 56,030 [metric tonnes] of U.S. wheat, Japan is seeking a buy of 62,000 MT and Saudi Arabia is reportedly interested in a large tender of U.S. milling wheat."

The state-run Grain Board of Iraq is tendering to purchase 50,000 metric tonnes of milling wheat of at least 12.5% protein from any origin, European traders said Tuesday.

Kansas City Board of Trade

Chatter about building winter weather premiums in hard red winter wheat were "short-lived" following extremely cold temperatures in eastern Colorado and western Kansas, said Benson Quinn analyst Dave Lehl in his daily market overview.

The crop is entering dormancy in "good condition after getting off to a well-established start," Lehl said.

But weather pressure is still in the forecast.

"Intense cold will not be a factor for soft or hard red winter wheat through Saturday afternoon, but intense cold slams southward across the Plains from Saturday through Sunday," said meteorologist Mike Tannura, president of T-Storm Weather. "Winterkill is possible across hard red winter wheat in Kansas and Colorado due to expectations for minimal snow and below 0 [degree Fahrenheit] temperatures.

Minneapolis Grain Exchange

The upside for wheat prices is limited by ample world supplies, said Ryan Kelbrants, a Benson Quinn Commodities analyst.

But, technically, wheat prices appear to be trading towards the bottom of their range, he added.

"The weak U.S. dollar should lend underlying support to prices although exports remain competitive," Kelbrants said.